BLUE RIBBON

Regency Blue Ribbon Restaurant



Regency Blue Ribbon Restaurant

Introduction

By analyzing three years' financial statement of Regency Blue Ribbon Restaurant Pty Ltd. including Balance sheets, income statements and cash flow to evaluate the company financial status. To avoid subjective point of view, this essay will respectively evaluate the company's performance and outlook from the perspective of a long-term lender, management based and trade creditor based using the Trend Analysis, Vertical analysis and important financial ratios.

To better understand the business condition of Regency Blue Ribbon Restaurant , It's needed to analyse the financial statement of three years by Finance structure, profitability, solvency and asset liquidity to know more about operation scale, ability of management and know which point should be improved as well as benefit to the stockholder .

Company, Industry, and Economic Environment

Description of company and management

The Regency Blue Ribbon Restaurant is a mid-sized restaurant located in a former mill, close to the edge of town in the BBQ district and is closely aligned with one of the BBQ in the area. It is family-owned and has been in operation for seven years. The Blue Ribbon Restaurant, is primary a cash business. The much heftier make-up on alcohol is a crucial source of income. Another important source of income is special functions such as weddings and group dinners.

Economic situation and outlook

Blue Ribbon's BBQ industry has won an international reputation for quality and value. Blue Ribbon BBQ have won many key international awards, competing favourably against longer- established national BBQ industries. Innovative Blue Ribbonn winemakers are sought internationally for their expertise.

Blue Ribbon was ranked fifth on the United Nations Food and Agriculture Organisation's list of world BBQ producers in 2002, producing 1220 million litres. In 2000 the Blue Ribbonn BBQ industry developed a 10-year marketing strategy - The Marketing Decade. This articulated a vision for Blue Ribbon to grow the consumer franchise for Blue Ribbonn BBQ to achieve by 2010 annual sales of A$5 billion, at a higher average margin and with enhanced brand values. The 2002-03 year saw Blue Ribbonn BBQ sales reach a record A$4 billion.

Limitations

The Statistics data is only from 3 years' financial performance of Regency Blue Ribbon Restaurant Pty Ltd. The result of analysis basis on certain assumption, it cann't entirely reflect actual situation, especially the ratio gotten from the year end point. These only provides some information for managers& stockholders to use in operation the business.

Evaluation of Financial Statement

A. Financial structure (Balance Sheet)

Horizontal Analysis

In this case, the earliest statement Year1 is used as the base for comparing all later Year2 and Year3. Alternatively, each statement may be compared to the immediately preceding statement. Great increase in the scale of company assets, It increased by 8% and 6% at the end of Year3 compared with Year1 and Year2 separately. All assets gain apparently except for prepaid expense and inventory. It appears company invest a lot of cash to further expand scale, the increase in accounts receivable may be due to changes in credit term or poor collection ...